The People vs. Unions: Cash, Credit and Corruption

While it’s a truism that for every finger you point at someone else you’ve got three pointed right back at you, for liberals it’s part of their laws of physics.

It would be impossible for the laws of liberals to govern without this binding hypocrisy that keeps them in orbit.

That’s why it shouldn’t surprise you that for all the leftist rhetoric about corporations and greed contributing the decline of the country, there’s one corporate outfit that’s really screwing up this country- and it’s a creation and a creature of the left.

Like most Big Left organizations it is a corporate body that is funded by you and I, but serves only the holy trinity of liberals, leftists and liars.

That corporation is, of course, Union, Inc.

Some call it Big Labor, but that’s an insult to the dignity of labor.

And if you want to see examples of corporate personhood gone bad you needn’t look to Wall Street. No; the stakes there are too high and the disclosures too transparent for mere corporation law to shield corporations from poor governance.

The laws of economics- the real laws, not the theories- usually take care of things in the private, corporate marketplace.

Instead- like many things in the country- you need to look farther left for real-life examples of rogue corporate personhood.

Union domination of the Democrat Party has become so entrenched- and so full of government money- that it’s impossible to tell if Union, Inc. is the parent corporation of the Democrats, or if the Democrats control the unions. And the symbiotic and sybaritic relationships between the unions and the Democrats have helped screw up corporations, municipalities and public policy in this country for too many decades.

Even as the so-called recovery notches another year, and state revenues begin to stabilize, municipalities and school districts are increasingly filing for bankruptcy in order to containing the rising cost of benefits demanded by unionized public workers.

In California, the greedy, union-benefits outfit working for public employees, called Calpers, is treated with kid gloves in both law and in practice. Law says that when municipalities file for bankruptcy, Calpers must be paid even if the benefits paid to Calpers are causing the bankruptcy. Police can be fired, private vendors stiffed, teachers laid off, investors in public debt can get zero pennies on the dollar, but union benefits must be paid.

The city of San Bernardino however is challenging union dominance over their balance sheet. The city is $5 million behind in pension payments, “the city simply says it's broke,” reports the San Francisco Chronicle. But “San Bernardino is treating CalPERS like any other creditor that's not getting paid.”

Of course the Chronicle is livid over union benefits being treated “like any other creditor that's not getting paid.”

“We urge San Bernardino to come to a solution with CalPERS that doesn't involve shorting the fund and its own retirees - or dumping its burdens on California's other taxpayers,” says the Chronicle.

But that’s exactly what Calpers already does.

Calpers is under-funded by anywhere from 55 percent to 75 percent in large part because Calpers uses math that would land private pension managers in jail. Calpers uses annualized growth rates of 7.5 percent when in fact the pension system only returned one percent last year. A 30-year Treasury right now only returns 2.79 percent. Last year the stock market returned zero percent and this year is up about 5 percent.

And really, under the law, a private pension manager would go to jail for using a 7.5 percent assumption to manage their pension fund.

That’s because someone will have to pay the difference between the assumption and the real rate of return. In both the Calpers and the private cases it will be the taxpayers who will pick up the tab.

Why should the city have to lay off workers because previously-elected officials entered into unsustainable retirement programs with unions who bankrolled their candidacies? Or because unions don’t have to use generally accepted accounting practices?

Cities -and states- shouldn’t have to choose between public safety and other necessities so that liberal council members and legislators can have an adequate supply of yard signs and bumpers stickers during an election year.

And taxpayers shouldn’t have to bailout union bad behavior again, just because they bought the Democrats with cash, credit and corruption.

John Ransom is the Finance Editor for Townhall Finance, host of Ransom Notes Radio and you can catch more of the best money advice and monetary commentary by him daily 10am PT, 1pm ET at WealthEd.com or on Comcast Cable.

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